What are the Undesirable Names for a newly incorporated company?
Whenever a new company is incorporated, one of the most crucial and perhaps the most time-consuming stage is of getting a name approved for the newly established entity. There is no doubt that a proposed name has a certain vision of the business endeavour attached to it. It can be really demoralizing if a proposed name is rejected by the authorities.
Moreover, repeated proposals for a company name and their rejections can pose serious hindrance and can cause unnecessary logjam.
Many people greatly suffer due to the wastage of time on account of company name approval, as many of them are not aware of the Undesirable Names list by the Ministry of Corporate Affairs of India.
No wonder, you can easily save your time from continual rejections of the proposed company names by referring to the MCA’s list of Undesirable Names given below.
(1) In determining whether a proposed name is identical with another, the differences on account of the following shall be disregarded-
(a) the words like Private, Pvt, Pvt., (P), Limited, Ltd, Ltd., LLP, Limited Liability Partnership;
(b) words appearing at the end of the names – company, and company, co., co, corporation, corp, corpn, corp.;
(c) plural version of any of the words appearing in the name;
(d) type and case of letters, spacing between letters and punctuation marks;
(e) joining words together or separating the words does not make a name distinguishable from a name that uses the similar, separated or joined words;
(f) use of a different tense or number of the same word does not distinguish one name from another;
(g) using different phonetic spellings or spelling variations shall not be considered as distinguishing one name from another. Illustration (For example, P.Q. Industries limited is existing then P and Q Industries or Pee Que Industries or P n Q Industries or P & Q Industries shall not be allowed and similarly if a name contains numeric character like 3, resemblance shall be checked with ‘Three’ also;)
(h) misspelled words, whether intentionally misspelled or not, do not conflict with the similar, properly spelled words;
(i) the addition of an internet related designation, such as .com, .net, .edu, .gov, .org, .in does not make a name distinguishable from another, even where (.) is written as ‘dot’;
(j) the addition of words like New, Modern, Nav, Shri, Sri, Shree, Sree, Om, Jai, Sai, The, etc. does not make a name distinguishable from an existing name and similarly, if it is different from the name of the existing company only to the extent of adding the name of the place, the same shall not be allowed; such names may be allowed only if no objection from the existing company by way of Board resolution is submitted;
(k) different combination of the same words does not make a name distinguishable from an existing name, e.g., if there is a company in existence by the name of "Builders and Contractors Limited", the name "Contractors and Builders Limited" shall not be allowed unless it is a change of an existing company name;
(l) if the proposed name is the Hindi or English translation or transliteration of the name of an existing company or limited liability partnership in English or Hindi, as the case may be.
(2) (a) The name shall be considered undesirable, if-
(i) it attracts the provisions of section 3 of the Emblems and Names (Prevention and Improper Use) Act, 1950 (12 of 1950);
7[(ii) it includes the name of a trade mark registered or a trade mark which is subject of an application for registration under the Trade Marks Act, 1999 and the rules framed thereunder unless the consent of the owner or applicant for registration, of the trade mark, as the case may be, has been obtained and produced by the promoters.]
(iii) it includes any word or words which are offensive to any section of the people;
(b) The name shall also be considered undesirable, if-
(i) the proposed name is identical with or too nearly resembles the name of a limited liability partnership,
(iii) the company’s main business is financing, leasing, chit fund, investments, securities or combination thereof, such name shall not be allowed unless the name is indicative of such related financial activities, viz., Chit Fund or Investment or Loan, etc.;
(iv) it resembles closely the popular or abbreviated description of an existing company or limited liability partnership;
(v) the proposed name is identical with or too nearly resembles the name of a company or limited liability partnership incorporated outside India and reserved by such company or limited liability partnership with the Registrar:
Provided that if a foreign company is incorporating its subsidiary company in India, then the original name of the holding company as it is may be allowed with the addition of word India or name of any Indian state or city, if otherwise available;
(vi) any part of the proposed name includes the words indicative of a separate type of business constitution or legal person or any connotation thereof e.g. co-operative, sehkari, trust, LLP, partnership, society, proprietor, HUF, firm, Inc., PLC, GmbH, SA, PTE, Sdn, AG etc.;
Explanation.- For the purposes of this sub-clause, it is hereby clarified that the name including phrase ‘Electoral Trust’ may be allowed for Registration of companies to be formed under section 8 of the Act, in accordance with the Electoral Trusts Scheme, 2013 notified by the Central Board of Direct Taxes (CBDT):
Provided that name application is accompanied with an affidavit to the effect that the name to be obtained shall be only for the purpose of registration of companies under Electoral Trust Scheme as notified by the Central Board of Direct Taxes;
(vii) the proposed name contains the words ‘British India’;
(viii) the proposed name implies association or connection with embassy or consulate or a foreign government;
(ix) the proposed name includes or implies association or connection with or patronage of a national hero or any person held in high esteem or important personages who occupied or are occupying important positions in Government;
(xi) the proposed name is identical to the name of a company dissolved as a result of liquidation proceeding and a period of two years have not elapsed from the date of such dissolution:
Provided that if the proposed name is identical with the name of a company which is struck off in pursuance of action 1["or under section 560 of the Companies Act, 1956(1 of 1956)"] then the same shall not be allowed before the expiry of twenty years from the publication in the Official Gazette being so struck off;
(xii) it is identical with or too nearly resembles the name of a limited liability partnership in liquidation or the name of a limited liability partnership which is struck off up to a period of five years;
(xiii) the proposed name include words such as ‘Insurance’, ‘Bank’, ‘Stock Exchange’, ‘Venture Capital’, ‘Asset Management’, ‘Nidhi’, ‘Mutual fund’ etc., unless a declaration is submitted by the applicant that the requirements mandated by the respective regulator, such as IRDA, RBI, SEBI, MCA etc. have been complied with by the applicant;
(xiv) the proposed name includes the word "State", the same shall be allowed only in case the company is a government company;
(xv) the proposed name is containing only the name of a continent, country, state, city such as Asia limited, Germany Limited, Haryana Limited, Mysore Limited;
(xvi) the name is only a general one, like Cotton Textile Mills Ltd. or Silk Manufacturing Ltd., and not Lakshmi Silk Manufacturing Co. Ltd;
(xviii) the proposed name includes name of any foreign country or any city in a foreign country, the same shall be allowed if the applicant produces any proof of significance of business relations with such foreign country like Memorandum Of Understanding with a company of such country:
Provided that the name combining the name of a foreign country with the use of India like India Japan or Japan India shall be allowed if, there is a government to government participation or patronage and no company shall be incorporated using the name of an enemy country. Explanation.- For the purposes of this clause, enemy country means so declared by the Central Government from time to time.
(5) The applicant shall declare in affirmative or negative ( to affirm or deny ) whether they are using or have been using in the last five years , the name applied for incorporation of company or LLP in any other business constitution like Sole proprietor or Partnership or any other incorporated or unincorporated entity and if, yes details thereof and No Objection Certificate from other partners and associates for use of such name by the proposed Company or LLP, as the case may be, and also a declaration as to whether such other business shall be taken over by the proposed company or LLP or not .
(6) The following words and combinations thereof shall not be used in the name of a company in English or any of the languages depicting the same meaning unless the previous approval of the Central Government has been obtained for the use of any such word or expression-
(l) Small Scale Industries;
(m) Khadi and Village Industries Corporation;
(n) Financial 8[Omitted] Corporation and the like;
(q) Development Authority;
(r) Prime Minister or Chief Minister;
(u) Forest corporation;
(v) Development Scheme;
(w) Statute or Statutory;
(x) Court or Judiciary;
(z) the use of word Scheme with the name of Government (s) , State , India, Bharat or any government authority or in any manner resembling with the schemes launched by Central, state or local Governments and authorities; and
(7) For the Companies under section 8 of the Act, the name shall include the words foundation, Forum, Association, Federation, Chambers, Confederation, council, Electoral trust and the like etc. Every company incorporated as a "Nidhi" shall have the last word ‘Nidhi Limited’ as part of its name.
(8) The names released on change of name by any company shall remain in data base and shall not be allowed to be taken by any other company including the group company of the company who has changed the name for a period of three years from the date of change subject to specific direction from the competent authority in the course of compromise, arrangement and amalgamation.
1. Inserted by Notification Companies (Incorporation) Amendment Rules, 2015 Dated 1st May, 2015.
2, 3, 4, 5 & 6. Omitted by Notification Companies (Incorporation) Amendment Rules, 2016 Dated 22nd January, 2016.
2. In sub-rule (2), sub-clause (ii) of clause (b),
Original Omitted Content - it is not in consonance with the principal objects of the company as set out in the memorandum of association;
Provided that every name need not be necessarily indicative of the objects of the company, but when there is some indication of objects in the name, then it shall be in conformity with the objects mentioned in the memorandum;
3. In sub-rule (2),sub-clause (x) of clause (b),
Original Omitted Content - the proposed name is vague or an abbreviated name such as ‘ABC limited’ or ‘23K limited’ or ‘DJMO’ Ltd: abbreviated name based on the name of the promoters will not be allowed. For example:- BMCD Limited representing first alphabet of the name of the promoter like Bharat, Mahesh, Chandan and David:
Provided that existing company may use its abbreviated name as part of the name for formation of a new company as subsidiary or joint venture or associate company but such joint venture or associated company shall not have an abbreviated name only e.g. Delhi Paper Mills Limited can get a joint venture or associated company as DPM Papers Limited and not as DPM Limited:
Provided further that the companies well known in their respective field by abbreviated names are allowed to change their names to abbreviation of their existing name after following the requirements of the Act;
4. In sub-rule (2),sub-clause (xvii) of clause (b),
Original Omitted Content - it is intended or likely to produce a misleading impression regarding the scope or scale of its activities which would be beyond the resources at its disposal:
5. Sub-rule (3),
Original Omitted Content - If any company has changed its activities which are not reflected in its name, it shall change its name in line with its activities within a period of six months from the change of activities after complying with all the provisions as applicable to change of name.
6. Sub-rule (4),
Original Omitted Content - In case the key word used in the name proposed is the name of a person other than the name(s) of the promoters or their close blood relatives, No objection from such other person(s) shall be attached with the application for name. In case the name includes the name of relatives, the proof of relation shall be attached and it shall be mandatory to furnish the significance and proof thereof for use of coined words made out of the name of the promoters or their relatives.
7. Substituted by Notification Companies (Incorporation) Third Amendment Rules, 2016 Dated 27th July,2016.
In sub-rule (2) for clause (ii),
"(ii) it includes the name of a registered trade mark or a trade mark which is subject of an application for registration, unless the consent of the owner or applicant for registration, of the trade mark, as the case may be, has been obtained and produced by the promoters;"
the following shall be substituted namely:-
"(ii) it includes the name of a trade mark registered or a trade mark which is subject of an application for registration under the Trade Marks Act, 1999 and the rules framed thereunder unless the consent of the owner or applicant for registration, of the trade mark, as the case may be, has been obtained and produced by the promoters."
8. Omitted by Notification Dated 27th July, 2016
In sub-rule (6), in clause(n), the comma between the words 'financial' and 'corporation' shall be omitted.